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Hedge Fund Investors in the Benelux Region - October 2012

by Graeme Terry

  • 29 Oct 2012
  • HF

Hedge funds have received a mixed response from investors in the Benelux region over the past year. The region, which comprises Belgium, the Netherlands and Luxembourg, represents a relatively small part of the European investor universe. Preqin’s Hedge Fund Investor Profiles database currently tracks 72 institutional investors in the Benelux region which are active in the hedge fund asset class. This represents just fewer than 2% of all active investors on Preqin’s Hedge Fund Online database, indicating that these investors make up a small proportion of the overall hedge fund investor landscape.

Of the active hedge funds investors based in the Benelux region, the vast majority (79%) are based in the Netherlands. In terms of investor type, private sector pension funds are the most common institutional hedge fund investor, representing 36% of the total. Other prominent investor types include funds of hedge funds (representing 17% of the total), asset managers (14%), wealth managers (10%), public pension funds (7%) and insurance companies (6%).

Long/short equity is the most common hedge fund strategy sought by hedge fund investors in the Benelux region, with 39% of investors indicating a preference for the strategy. This is closely followed by macro (37% indicate an interest in the strategy) and managed futures/CTA (34%), which are also popular in the region. Other common strategies include multi-strategy (31%), event driven (26%), equity market neutral (21%), long/short credit (19%) and relative value arbitrage (18%).

Structural preferences of hedge fund investors in the Benelux region are fairly evenly split, with 39% investing solely through funds of hedge funds and the reminder split equally between investors which only invest directly and those which use a combination of the two methods. Specialized structures such as managed accounts and UCITS hedge funds are also relatively popular in the region, with 19% of investors indicating an interest in separately managed accounts and 16% indicating an interest in UCITS hedge funds.

Recent Benelux investor attitudes towards hedge funds have been mixed. One active investor is the €20bn Shell Netherlands Pension Fund, which recently announced that it plans to make two to three new hedge fund investments over the coming year with a focus on market neutral and structured credit strategies. However, a number of investors have shown dissatisfaction with the asset class, including the €12.5bn Timeos Pension Fund, which had previously invested in hedge funds but made the decision to exit the asset class in 2011.

Overall, Benelux represents a relatively small portion of the overall hedge fund universe. However, the region is home to a number of large asset managers and pension funds and, as a result, there are opportunities for hedge fund managers to receive substantial capital from the region if their funds are marketed correctly. As with many other regions worldwide, current investor attitudes towards hedge funds are mixed due to ongoing performance concerns. Despite this, it is likely that investors in the Benelux region will continue to include hedge funds within their portfolios.

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